Britannia's international biz to bring in 12-13% sales in 5 yrs

Contribution of Britannia's international business to total sales will close to double to 12-13 percent in the next five years, said Managing Director Varun Berry. Britannia is no longer going to stick to bakery and dairy products, said Berry. The company is also keenly looking at the micro-snacking space for expansion."Britannia is going to be a total foods company very soon. One new food category will be announced shortly," he said.Talking about the negative effects of demonetisation, Berry said it dampened consumer sentiment, because of which volume growth of the company suffered in the third quarter of current fiscal."It will take around 3-6 months for the volume to come back to the double-digit terrain," he added.He sees tepid growth in the coming quarter due to the after effects of the cash ban. He said robust growth will follow.The company has been looking at every opportunity to cut costs, and most of the savings are likely to come from the supply chain. Other avenues that the company is exploring to reduce spending includes tweaking its recipe and sales and marketing techniques.Britannia is not looking at any acquisitions in the near future.Below is the verbatim transcript of Varun Berry's interview to Mangalam Maloo on CNBC-TV18.Q: You have been amazing for the company’s operational performance that is on record, the time you joined, the margins were around 7 percent, now they are 14 percent. Is that trajectory likely to continue 14 percent EBITDA margins, can we better that going forward?A: It is very important to be optimistic of what we can do. I certainly think that it can be better. Obviously it is going to be a hard trek, it is not going to be an easy trek from hereon. We have gotten to a stage where we are way beyond where we were and way beyond what we thought what we would be. The team is completely like a dog on a bone and they are looking at each and every possibility of cost savings.Q: Where is the cost saving coming in from, what is your brief to the new CFO?A: It comes from supply chain. It comes from the recipe, it comes from wastages, it also comes from sales and marketing. The kind of margins, the kind of the discounts that we give to our customers etc. so it is all across.However, I would say the bulk of it stays in the area of supply chain.Q: The next leg of growth, where will that come from, volumes, margins or increased distribution?A: It will have to come from everything.Q: If I have to look at Britannia a few years from now, will it still be the bakery major which is into biscuits, cookies as well as cakes or is there a chance of moving into other categories too?A: Britannia is certainly going to be a total foods company. I can promise you that. So we are going to look at not just a lot of space within bakery where either we are weak or we are non-existent and also look at outside of that in the entire macro-snacking space where I think there are lots of potential opportunities.Q: Throw some more light on that, are you looking at Britannia chips, Britannia pancake mixes, Britannia noodles, Britannia what?A: Britannia is going to be in spaces where we have a right to succeed and I won’t be able to share it with you, maybe we will have the same interview a couple of years from today and we will talk about what we have done.What we are doing is we are evaluating each and every niche in each and every category that we are in and we aren’t in. So that we can figure out, which are the products, which are going to take us to this new avatar of being a total foods company.Q: So you are taxiing right now, where does the take-off happen?A: The take-off is going to happen very soon because one of the categories we are very close to finalising. So I would think that by the end of the year, the take-off will happen in one of the categories and that could be a ground-breaking category for country like India.Q: Tell me about the recent past, you have Q3 performance marked by demonetisation, 2 percent volume growth, when do we see volumes growth resuming back to the double digit terrain?A: It is going to take some time. I think the demonetisation has definitely got the spirits of the consumers down. It is probably going to take three-six months. Every month we are seeing better results than the previous month but getting back to where we were in the month of October will take three-six months. Probably there is going to be a little bit of tepid growth in Q1 of the next financial year and thereafter we should get back to a pretty robust growth environment.Q: What is your market share currently in the Hindi belt and what would you like it to be?A: We are early teens and I would think that we should be gaining at least 2-3 share points every year.Q: How serious are you about the international business as a contributor to your revenue?A: It is going to move slowly. I would say in the next five years if you can get from 6-7 percent that we get today to about 12-13 percent, I would be quite happy with that. This is without any acquisition.Q: Are you guys evaluating any acquisition options?A: Not as yet. This is not the time to do it.Q: Will you guys be open to someone else acquiring you?A: Not at all.Q: So the Wadias are not looking to sell their stake in Britannia?A: Not at all. He is very happy to build this company to take it to a very different level.Q: What is you caught your children eating a competitor's product?A: I did catch my younger son eat a competitor’s product once and I asked him, "Why are you consuming this product", and he is 21-years-old now, he said, "It is a better product". So we went and we reformulated the product.Q: You will have to tell me the product, you will have to tell me the competitor and you will have to tell me what you did about that?A: It was Hide & Seek, it is a Parle product and he liked it. It is a chocolate chip cookie. So he was eating that and he said, "It is a great product". So we went and reformulated our GoodDay choco-chips and today he prefers the GoodDay choco-chips to Hide & Seek. I have got that worked out.